by Mark Smiley | Oct 24, 2018 | Travel
Value Has Grown To $112 Million In Just 12 Months; Complaints Soar As Homes Become The Motel Next Door
by Glen Richardson
Highlands Hot: Unique and nostalgic homes have made short-term rentals in the Highlands neighborhood one of the hottest.
Valley neighborhoods are becoming more and more concerned about short-term rentals by homeowners through Airbnb and others. Their complaint is about the stream of homeowners, some new, renting the house next door for days or up to a few weeks. In neighborhoods such as the Highlands and the Golden Triangle many say the annoyance is progressively on the rise and threatening to escalate into citywide anger and fury.
That’s not a big surprise to Denver: Between January and July of this year the city received 112 complaints concerning primary residence, typically from local neighbors. Furthermore, residents contend that it’s unfair to expect neighbors to be the driving force behind legal compliance.
More than a year and a half after the City of Denver first tried to crack down on short-term rentals, the blossoming industry — buoyed by thousands of new homeowner hosts — has consistently stayed steps ahead of regulators. City records, combined with data provided by Denver-based analytics firm AirDNA reveals incessant problems with the city’s efforts to control a market that is bringing in more than $100 million a year.
Compliance Collapse
According to a study done and reported by BusinessDen — a website for local business news — less than half of the city’s known short-term rental landlords comply with licensing regulations. The bottom line, the study concludes: “The primary-residence requirement, designed to calm the fears of homeowners that their residential neighborhoods could become dominated by the motel next door has proven toothless and largely unenforceable.”
Denver’s Department of Excise & Licenses says the compliance rate is down due to the surge in people listing short-term rentals in the city. That’s because short-term rentals in Denver have grown in value to at least $112 million in the last 12 months. Moreover, it’s expected to top $200 million by 2021. AirDNA figures also show that properties in prime locations have annual cash flow topping six figures.
In only eight years San Francisco-based Airbnb’s initial plan to allow homeowners to host business travelers in a spare bedroom or to rent their family home to tourists while they’re out of town has made it a $25 billion c
Home Away From Home: Price versus hotels and all the comforts of home have given a big boost in demand for short-term rentals.
ompany. The reason is simple: In comparison to prices for staying in a hotel the cost of a short-term rental is significantly lower. A short-term one-bedroom home in Denver often starts as low as $50 per night. With a hotel there’s typically a bed, a television and maybe a desk and chair. With short-term rentals travelers think they’ve never left home.
Seeking Visitor Dollars
Recognizing the economic benefit to the city coming from short-term rentals Visit Denver — the private, nonprofit association that markets metro Denver — touts on its website that the city has approved and is licensing short-term rentals. The site does urge visitors: “If you are visiting Denver and interested in renting a home, or part of a home, for fewer than 30 days, make sure that you rent from homeowner-hosts who are licensed by the City and County of Denver.”
Denver’s rules don’t allow property owners to run more than one Airbnb location other than a basement or carriage house. Nevertheless, AirDNA records indicate that at least 39% of the city’s properties are offered full-time year-round. More: Another 17% run more than one property. Furthermore, multi-listing hosts account for 40% of Denver’s rentals on Airbnb or about 2,000 listings.
Excise & Licenses has only a single compliance officer to handle 2,200 unlicensed rentals plus another 2,000 listings run by mult
Area Anxiety: Residents worry growth of short-term rentals in Denver’s most popular neighborhoods will change their character and transform the quality of life.
i-unit hosts (prohibited altogether under Denver law). The department’s six inspectors help with short-term rental issues but also deal with the city’s 180 other business licenses plus evolving industries such as marijuana. George Mayl, president of Inter-Neighborhood Cooperation (INC), says it best: “They’re undermanned and understaffed.”
Beginning April 1 of this year Airbnb started collecting Denver Lodger’s tax on sales of short-term lodging. The deal resulted in the city receiving $3 million while not forcing short-term rental property owners to send taxes to the city. During the same period Airbnb made $69 million from rentals. Based on AirDNA data, the city should have received more than $7 million.
Property Value Impact
There is a lot of talk among property owners about short-term rentals and their impact on real estate values. One of the most common questions is do short-term rentals increase the value of a particular residential property? Some homeowners feel it can add as much as 40% to the property value due to generating additional income.
Commercial and residential lenders, however, don’t agree. “A short-term rental has zero impact on value and should not be factored in when evaluating a property.”
Why? Regulations, they argue, can and often change overnight. Moreover they point out that permits are very different than a change in zoning which provides much greater certainty for future buyers of a property. Lenders conclusion: “Don’t buy into the hype that the income from a nightly rental will increase the value of the property.”
Quality Quotient: With 82% of Airbnb properties ranked at least 4.5, the online marketplace now publishes a Quality Score of every Denver short-term rental property.
Investor Influence
While lenders don’t see a benefit to short-term rentals professional real estate investors are far more optimistic. The financial benefit of an Airbnb property is clear to some investors: They can make more money from short-term rentals for the same reason vacationers typically spend more on lodging while traveling than they do on rent.
So how many professional real estate investors list properties on Airbnb? And how large are their businesses?
The best way to see whether there is a major trend of professional investors using Airbnb would be to see how many hosts rent out multiple properties on the site. In Denver at least numbers imply that 40% of listings are from multi-listing hosts indicative of probable professional investors. AirDNA, it should be pointed out, helps real estate investors make short-term rental property investment decisions. Thus the presence of professional investors has become controversial. The upshot is that Airbnb has become close-mouthed about disclosing information.
by Mark Smiley | Oct 24, 2018 | General Featured
Despite Colorado Center’s Classy Transit Connection New Adjacent Development Is Creating Corridor Sprawl
by Glen Richardson
“Ride the Rail to reduce traffic, air pollution and lower your stress.”
Washed Up: This self-service carwash site has sold for $767,000 and is the location of a proposed second apartment complex on Colorado Blvd. Construction is expected to start early next year with completion in 18 months.
Traffic Trouble: The Millennium Colorado Station apartment complex under construction at Colorado Blvd. south of Evans is already creating traffic gridlock.
Millennial Map: Millennium Colorado Station’s massive development stretches along Colorado Blvd. to Warren Ave. and extends east from Colorado Blvd. to Ash St.
It is at the Colorado Center more than anywhere else that Denver seemed to be getting transit right. The 13-acre office, retail and entertainment complex features a Light Rail Station, FasTracks, CarShare and an $8 million bike-pedestrian bridge across I-25. As a transit-oriented development (TOD), the venture east of Colorado Blvd. and north of Evans Ave. initially seemed to be the Valley’s perfect transit project.
Wrong: TOD’s “evil brother,” transit-adjacent development (TAD) is literally taking over the adjoining neighborhood with a gargantuan development somewhat close to the Center’s transit, but not oriented to transit. Unfortunately in a city/county where developers have the final say, far more TADs than TODs are popping up along the Valley’s transit line. At nearly every station on any given line, you’ll find, at the least, clumps of new-fangled apartments and more often than not, fresh fast food chains and novel businesses.
Developer Deal
Being promoted as Millennium Colorado Station the new development is a colossal 580,000-sq.-ft., 350-unit apartment complex under construction a block south of Evans Ave. That’s in spite of the fact Colorado Station’s “General Development Plan” approved by the Denver Planning Board in 2006 clearly stated: “Development is to be concentrated closest to the station with a decrease in intensity in adjoining nearby neighborhoods.”
Exploding on the east side of the heavily traveled traffic thoroughfare, the project stretches south along Colorado Blvd. to Warren Ave. A moneymaking way for the developers to leverage the potential of transit-oriented developments without any of the costs, the sprawling project extends east from Colorado Blvd. to Ash St. Furthermore, the apartment complex is likely to charge a premium rate claiming it is along transit routes.
Houston-based The Dinerstein Companies ac
Colorado Center Class: The Master Planned transit-oriented Colorado Center will have this retail “Main Street” section plus a residential tower with 189 apartments, 80 lofts.
quired the old Criterion Shopping Center that later housed the Amish Furniture Gallery at 2154 S. Colorado Blvd. in the summer of 2017. The firm also purchased two adjacent homes on Ash St. where they began construction a year-ago September. Los Angeles real estate investment firm CityView is a partner in the project. South Broadway-based the Cuningham Group Architecture, who is designing the monster structure, describes it as, “a clean, modern design with a diverse mix of materials, including stucco, wood and metal.” Amenities will include a pool, wet deck, cabanas and outdoor kitchen. There will also be a fitness center, game room, bike room and pet spa. Completion of the project is anticipated for the second quarter of 2019.
About The Area
The median real estate price in the E. Evans and South Colorado Blvd. area is $1,264,045, which is more expensive than 99% of the neighborhoods in Colorado. The average monthly rental price is currently $1,925, based on NeighborhoodScout’s exclusive analysis. That’s higher rent than in 68.5% of the state’s neighborhoods.
Neighborhood real estate is primarily made up of small (studio to two bedroom) or large (four or more bedroom) single-family hom
Beauty & The Beast: Huge complex being crammed into area southeast of Colorado and Evans has replaced some businesses and homes while creating concerns for others.
es and apartment complex — high rise apartments. Many of the residential homes are older having been built between 1940-1969. A number of residences, however, were built from 2000 to the present.
The home and apartment vacancy rates are 10.7% in the area of E. Evans and S. Colorado Blvd. According to the NeighborhoodScout analysis, that rate is lower than 40.9% of the neighborhoods nationwide. The analysis indicates this is approximately near the middle for vacancies nationally.
About Center, Station
Centrally located between downtown and the Denver Technology Center, the premier transit oriented development has long been the home to a Dave & Busters plus Colorado Center Stadium 9 & IMAX.
There are now three Class A Office Buildings on the site. The recently finished 400,000-sq.-ft. Tower III completed the office component of the project. Following Denver-based Tryba Architects Master Plan, there is more than one million square feet of additional development that will include a 205,000-sq.-ft. residential tower that will house 189 apartments and 80 loft-style units plus a fitness center. Also in the plans is a new, 24-hour retail “Main Street” section.
Colorado Station is a side-platform light rail station operating as part of the E, F, and H Lines. Opened in November 2006 it now boasts 5,600 boardings and arrivals each day. Surveys show that 2% bike, 43% walk to transit and the balance drive to the station. There is an RTD Park-n-Ride lot two blocks east of Colorado Blvd. Located at 4401 E. Evans Ave. it holds approximately 400 cars.
What’s Ahead?
As cranes loom over the Colorado Blvd. skyline south of Evans Ave. residents and businesses are asking what will their neighborhoods become? The answer can likely be found surrounding RTD’s Evans Station, a light-rail station further west on Evans Ave. that opened in July 2000.
A TAD Too Much: Projects such as this gigantic complex going up on Colorado Blvd. south of Evans leverage the potential of transit-oriented developments without the costs.
There developers have requested permission to build up to eight floors at 2065 S. Cherokee St. in the Overland neighborhood. The 0.7-acre site is just northeast of the Evans Station, a site that has seen several apartment buildings sprout up. The latest zoning request would allow for a project similar to the Encore Evans Station, a 224-unit apartment complex that recently opened.
Some may see it as gentrification, but intensive development with new apartments crammed in alongside or replacing businesses and historic homes appears to be the future of light-rail in Denver. With the city’s encouragement, neighborhoods can expect more and more “evil brother,” transit-adjacent development (TAD) projects hopping on the “light rail gravy train.”
A TAD More Apartments Coming To Colorado Station
A developer has submitted plans for a second apartment complex adjacent to the massive 350-unit Millennium Colorado Station going up on Colorado Blvd. Developer Austin Schmidt wants to build a five-story apartment building that would be surrounded by the enormous project under construction.
The latest transit-adjacent development (TAD) is at the 0.28-acre site of a self-service carwash that has been on the E. Warren Ave. site for at least a dozen years. Schmidt and silent partners paid $767,000 for the lot.
Schmidt admits proximity to the light-rail station two blocks north is what attracted him to the site. The five-story project would have 52 studio, one and two bedroom units. Parking would be on the floor and basement levels. The developer expects to break ground early next year with construction completed within 18 months.
